Bank of India

Bank of India provides banking & financial services. Its services include cash management, forex, treasury products, trade finance, deposits, retail banking, and third-party products. The bank has 4,952 branches in India.

BSE

532149

NSE

BANKINDIA

REUTERS

BIO.CO

INCEPTION

1906

IPO

1997

INDUSTRY

BANKS – PUBLIC SECTOR

CMP (as on 6/11/2015)

119.15

Stock Beta

1.52

52 Week H/L

78.40 – 149.00

Market Cap (Cr)

12577

Equity Capital (cr)

1054.70

 

4.41M

Face Value (Rs)

10

Average Volume

 

Shareholding Pattern (%)

Promoters

73.72

Non Institutions

26.28

Grand Total

100.00

Recommendation
  • High slippage due to BoI’s conservative approach on recognizing NPAs, despite most loans being under consortium‐lending arrangements.

  • No major improvement is expected on margins

  • Asset quality pressures get aggravated, no respite seen in the near term

Weak asset quality continues to put pressure on growth and profitability for the bank. Maintain NEUTRAL with a target price of Rs 140.

Financial Summary

Income Statement As on 15/09/2016

2013

2014

2015

2016

Total Income

35880.42

42444.18

47962.95

45764.46

Total Expenditure

33139.24

39711.54

46214.61

52099.43

Adjusted Net Profit

2819.69

2986.73

2012.9

-6204.66

EPS

45.58

45.6

29.23

0

Key Ratios

Credit-Deposit (%)

76.92

76.97

76.7

72.91

Investment / Deposit (%)

26.25

24.7

23.66

23.41

Cash / Deposit (%)

5.3

4.81

4.62

5.88

Interest Expended / Interest Earned (%)

71.54

71.26

73.76

71.85

Other Income / Total Income (%)

10.55

10.18

8.92

8.02

Operating Expenses / Total Income (%)

15.21

16.08

17.08

20.59

Interest Income / Total Funds (%)

7.63

7.41

7.31

6.8

Interest Expended / Total Funds (%)

5.46

5.28

5.39

4.89

Profit before Provisions / Total Funds (%)

1.77

1.64

1.26

0.98

Net Profit / Total funds (%)

0.65

0.53

0.29

-1.02

RONW (%)

12.57

10.85

6.24

0

Pay-out (%)

22.6

12

19.79

0

BUSINESS DESCRIPTION

Bank of Baroda is engaged in providing various services, such as personal banking, corporate banking, international banking, small and medium enterprise (SME) banking, rural banking, non-resident Indian (NRI) services, and treasury services. The Bank's segments include Treasury, Corporate/Wholesale Banking, Retail Banking, and Other Banking Operations. The Bank offers personal banking services, such as deposits, loans, mobile banking and wealth management services; business banking services, such as Baroda Money Express, debit cards, and collection services; corporate banking services, such as appraisal and merchant banking, and cash management and remittances; international banking services, such as export, import, and trade finance, and correspondent banking; rural banking services, such as deposits, priority sector advances, financial inclusion and lockers, and treasury services, such as domestic and forex operations. The Bank operates a network of approximately 5,330 branches.

Bank of India, incorporated in the year 1906, is a Large Cap company (having a market cap of Rs 11,320.5 Cr.) operating in the Banks sector.

Bank of India key Products/Revenue Segments include

  • Interest & Discount on Advances & Bills which contributed Rs 30370.90 Cr to Interest Income (72.66% of Total Interest Income)

  • Income From Investment which contributed Rs 8952.13 Cr to Interest Income (21.41% of Total Interest Income)

  • Interest On Balances with RBI and Other Inter-Bank Funds which contributed Rs 2120.94 Cr to Interest Income (5.07% of Total Interest Income)

  • The interest which contributed Rs 352.49 Cr to Interest Income (0.84% of Total Interest Income)

for the year ending 31-Mar-2016.

The Bank has reported a Gross Non Performing Assets (Gross NPAs) of Rs 51874.50 Cr. (13.38% of total assets) and Net Non-Performing Assets (Net NPAs) of Rs 28260.40 Cr. (7.78% of total assets).

MANAGEMENT & GOVERNANCE

Name

Designation

R L Bishnoi

Director(PartTime NonOfficial)

Harvinder Singh

Director (Officer Employee)

Neeraj Bhatia

Director (Shareholder)

SANJIV KUMAR ARORA

Director (Shareholder)

R P Marathe

Executive Director

R A Sankara Narayanan

Executive Director

Melwyn Oswald Rego

Managing Director & CEO

Gopalaraman Padmanabhan

Chairman (Non-Executive)

Rajeev Bhatia

Company Secretary

R Sebastian

Nominee (RBI)

Girish Chandra Murmu

Nominee (Govt)

Veni Thapar

Director(PartTime NonOfficial)

Shareholding pattern as on Sept, 2016

Recent Development

  • Home loans and mortgage loans (occupying 67% of the retail loan book, 9% of total advances) grew 18.5% YoY and 21.2% YoY respectively. The overall retail book expanded 12.75% while corporate loans de-grew 8.34% YoY

  • The management has guided for a blended growth in CASA deposits at 19% for FY17

  • Loan mix targeted at 45:55 between corporate and retail (currently 55:45)

  • The bank is in the process of recovery with there being a conscious strategy to consolidate the balance sheet, leading to muted loan growth

  • Loan growth for FY17 to be at 6-8%; International loan book to reduce by 9%, Domestic book to increase by at least 12%.

Recoveries/up gradations were at INR31.8b (highest ever); the bank has guided for better run-rate for the rest of the year and see cumulative print at INR175b for FY17. Treasury Income stood at the level of Rs 1312.96 crores in Q1 of FY17. The increase in income provided support to both interest and Non-Interest Income. Total size of Bank’s Domestic Investment as on 30th June, 2016 stood at Rs.1,05,775 crore.

As on 30th June, 2016, the share of SLR-Securities in Total Investment is 85.53 %. The bank had 83.89 % of SLR-Securities in HTM and 16.11 % in AFS as on 30th June, 2016. The percent of SLR to NDTL as on 30th June, 2016 was at 23.31 %. The bank shifted SLR Securities worth Rs. 13,854.96 crore from HTM to AFS portfolio during FY17.

As on 30th June, 2016,the modified duration of AFS investment was 3.98 and that of HTM securities was 4.84 .

Bank has undertaken various Capital Optimization measures and could conserve RWA of Rs.21,335 crores and Capital of Rs.2,377 crores during FY 2015-16 and for Q1 FY 2016-17, RWA of Rs.4,181 crores and Capital of Rs.501 crores were conserved.

Closing Balance of Net NPAs

Co_Name

2012

2013

2014

2015

2016

St Bk of India

15819

21956

31096

27591

55807

Kotak Mah. Bank

237

311

574

609

1262

ICICI Bank

1861

2231

3298

6256

12963

IDBI Bank

2911

3100

4902

5993

14643

Bank of Baroda

1544

4192

6035

8069

19406

Punjab Natl.Bank

4454

7237

9917

15397

35423

Bank of India

3656

5947

7417

13518

27996

 

 

Co_Name

Credit-Deposit (%)

2012

2013

2014

2015

2016

St Bk of India

81

84

86

84

83

Kotak Mah. Bank

148

139

130

124

112

ICICI Bank

101

104

106

111

111

IDBI Bank

86

86

85

82

81

Punjab Natl.Bank

78

79

80

79

78

Bank of Baroda

74

71

69

69

68

Bank of India

75

77

77

77

73

Average

95

94

93

91

89

 

 

Co_Name

Investment / Deposit (%)

2012

2013

2014

2015

2016

St Bk of India

35

33

32

32

32

Kotak Mah. Bank

93

90

85

75

65

ICICI Bank

79

83

83

78

73

IDBI Bank

41

39

41

44

41

Punjab Natl.Bank

31

32

33

33

31

Bank of Baroda

25

23

24

23

20

Bank of India

29

28

26

25

24

Average

51

50

50

47

44

 

 

Co_Name

Cash / Deposit (%)

2012

2013

2014

2015

2016

St Bk of India

7

6

6

7

7

Kotak Mah. Bank

7

5

5

5

5

ICICI Bank

8

7

6

6

6

IDBI Bank

9

6

5

5

5

Punjab Natl.Bank

6

5

5

5

5

Bank of Baroda

6

4

3

4

4

Bank of India

6

5

5

5

6

Average

7

5

5

5

5

 

 

Co_Name

Interest Expended / Interest Earned (%)

2012

2013

2014

2015

2016

St Bk of India

61

64

64

64

64

Kotak Mah. Bank

54

56

53

52

55

ICICI Bank

66

63

60

59

57

IDBI Bank

80

78

77

79

78

Punjab Natl.Bank

63

65

63

64

68

Bank of Baroda

65

67

68

68

70

Bank of India

71

72

71

74

72

Average

65

65

64

64

65

VALUATION

Weak asset quality continues to put pressure on growth and profitability for the bank. Maintain Neutral with a target price of Rs 140.

Dividend History

Industry Overview

The government has cut prevailing interest rates on small savings instruments by 60‐130bps, to bring them in line with market rates. This is a welcome move from a bank’s perspective, as the interest rate differential between bank deposits and some small savings instruments was as high as 170bps (without even factoring tax benefit in schemes such as PPF). Banks have been clamoring for a recalibration of this rate for a while now.

The narrowing differential could provide banks elbow room to cut their deposit rates further. State Bank of India’s one‐year term deposit rate is 7.25%; the lowest it had gone down to (in recent history) was 6% (between November 2009 and March 2010). The interest rate offered by SBI in 1 year deposit is higher than post office 1 yr deposit product. This provides headroom for banks to cut interest in 1 year deposit product. The declining cost of deposits augurs well for SBI’s net‐interest margin, which has been under pressure due to poor credit demand and rising non‐performing loans. The benefit of the decline in deposit rates will be transmitted to borrower under MCLR (marginal cost of fund‐based lending rate).

We believe that banks’ one‐year term deposit rates might see cuts, thereby placing them in better positions to provide short‐term funds to corporate at more competitive rates. Corporates have shifted to the commercial‐paper (CP) market due to the rising rate differential. CP (outstanding Rs 3.56tn) is likely to come back to banks once MCLR kicks in, which bodes well for their loan book growths. Assuming that most of the commercial paper shifts to banks in the form of loans, their loan books could see additional growths of 4‐5%.

Declining inflation and reduction in deposit rates provides additional scope for rate cuts by the policy maker. We expect some rally in the bond market as well. NBFCs and HFCs would benefit from further softening of interest rates in the capital market – MMFS, Cholamandalam Finance, and LIC HF.

FINANCIALS

For the quarter ended 30-Jun-2016, the company has reported a Standalone Interest Income of Rs. 6737.27 Cr., down - 8.15% from last quarter Interest Income of Rs. 7335.30 Cr. and down -16.04% from last year's same quarter Interest Income of Rs. 8024.32 Cr. The company has reported a net profit after tax of Rs. -741.36 Cr. in the latest quarter.

The company has M M Nissim & Co. as its auditors. As of 08-Sep-2016, the company has a total of 1,054,695,104 shares outstanding.

Performance at a Glance

Business -Sequential

Key Sectors – Domestic Credit

Retail Credit

Priority Sector Advances

Domestic Credit- Industry Wise

Sector-wise NPA

 

CO_NAME

Total Income

2012

2013

2014

2015

2016

Kotak Mah. Bank

13014

15950

17268

21471

28032

ICICI Bank

66658

74204

79564

90216

101396

IDBI Bank

25586

28410

29720

32354

31576

Punjab Natl.Bank

41735

47380

49668

54884

57780

Bank of Baroda

34589

40953

46018

50364

51791

Bank of India

31930

35880

42444

47963

45764

Average

36316

41379

44448

49858

54115

 

 

EBITDA

2012

2013

2014

2015

2016

Kotak Mah. Bank

7363

9348

10215

11753

16491

ICICI Bank

36365

42521

46711

51450

49144

IDBI Bank

21572

22477

22494

23930

18512

Punjab Natl.Bank

31263

34924

33556

36124

29451

Bank of Baroda

26324

30003

33969

36898

26400

Bank of India

23977

26166

30971

34363

22499

Average

24577

27855

29389

32031

28000

 

 

PAT

2012

2013

2014

2015

2016

Kotak Mah. Bank

1833

2187

2464

3035

3456

ICICI Bank

7646

9578

10944

12245

10166

IDBI Bank

2001

1889

1153

942

-3591

Bank of Baroda

5289

4805

5001

3912

-5070

Punjab Natl.Bank

5022

4952

3614

3397

-3692

Bank of India

2724

2820

2987

2013

-6205

Average

4358

4683

4635

4706

254

 

 

ROW (%)

2012

2013

2014

2015

2016

St Bk of India

16.12

15.32

10.47

11.35

7.48

Kotak Mah. Bank

15.29

15.43

14.53

14.87

12.36

ICICI Bank

13.3

15.21

15.9

16.06

12.42

IDBI Bank

13.31

10.29

5.63

4.29

0

Bank of Baroda

20.66

15.61

14.28

9.85

-12.73

Punjab Natl.Bank

20.09

16.03

10.09

8.64

-9.2

Bank of India

14.61

12.57

10.85

6.24

0

Average

16.46

14.65

11.82

10.84

1.72

 

Income Statement As on 15/09/2016

2010

2011

2012

2013

2014

2015

2016

INCOME :

 

 

 

 

 

 

 

Interest/Discount on advances/Bills

13169.59

15569.62

20334.08

23277.32

27298.32

31878.18

30582.67

Interest on Balances with RBI & Others

261.6

798.2

847.46

1278

2019.11

2174.34

2179.22

Income from Investment

4489.76

5195.2

7163.6

7287.04

8424.41

9423.75

8976.14

Others

75.3

295.41

265.81

253.46

383.34

208.6

354.81

Interest Earned

17996.25

21858.43

28610.95

32095.82

38125.18

43684.87

42092.84

Other Income

2600.66

2641.82

3319.24

3784.6

4319

4278.08

3671.62

Total Income

20596.91

24500.25

31930.19

35880.42

42444.18

47962.95

45764.46

Expenditure

 

 

 

 

 

 

 

Interest on Deposits

10853.35

12218.45

18006.05

20313.27

23863.51

29049.88

27097.82

Interest on RBI/Inter-Bank Borrowings

555.7

812.91

1145.34

1489.08

1839.1

1619.41

1920.79

Other Interest

754.22

949.57

1064.91

1158.06

1467.16

1550.76

1226.7

Interest expended

12163.27

13980.93

20216.3

22960.41

27169.77

32220.05

30245.31

Payments to/Provisions for Employees

2308.75

3492.01

3089.51

3179.17

4036.59

5031.3

5403.59

Operating Expenses & Administrative Expenses

619.77

708.48

851.37

954.19

1256.3

1370.22

1414.23

Depreciation

109.96

144.86

175.05

189.07

233.9

291.08

289.96

Other Expenses, Provisions & Contingencies

2893.05

2669.29

4012.21

5580.61

6180.49

7198.54

16447.98

Provision for Tax

763.55

1015.97

911.13

275.79

834.49

103.42

1471.42

Deferred Tax

0

0

0

0

0

0

-3173.06

Total Expenditure

18858.35

22011.54

29255.57

33139.24

39711.54

46214.61

52099.43

Profit & Loss

 

Net Profit

1738.56

2488.71

2674.62

2741.18

2732.64

1748.34

-6334.97

Minority Interest (after tax)

-2.77

5.54

8.03

-1.79

1.35

1.89

-71.66

Profit/Loss of Associate Company

45.83

59.25

58.27

76.92

255.48

266.47

59.05

Net Profit after Minority Interest & P/L Asso.Co.

1787.16

2542.42

2724.86

2819.89

2986.77

2012.92

-6204.26

Extraordinary Items

0.06

0.02

0.56

0.2

0.04

0.02

0.4

Adjusted Net Profit

1787.1

2542.4

2724.3

2819.69

2986.73

2012.9

-6204.66

 

Equity Dividend (%)

 

70

 

70

 

70

 

100

 

50

 

50

 

0

Dividend Per Share(Rs)

7

7

7

10

5

5

0

EPS

32.83

45.34

46.32

45.58

45.6

29.23

0

Book Value (Unit Curr.)

247.5

298.17

351.22

390.33

420.4

435.18

392.05

 

Balance Sheet

2014

2015

2016

SOURCES OF FUNDS :

 

 

 

Capital

643

665.65

817.29

Reserves Total

30130.72

31857.2

31224.72

Equity Share Warrants

0

0

0

Equity Application Money

0

0

1303.65

Minority Interest

84

167.93

98

Deposits

478695.1

534482.3

515722.5

Borrowings

48427.51

40098.69

51103.28

Other Liabilities & Provisions

20174.29

18012.98

16359.82

Policy Holders Fund

0

0

0

Others

0

0

0

TOTAL LIABILITIES

578154.6

625284.8

616629.2

APPLICATION OF FUNDS :

 

 

 

Cash & Balances with RBI

19287.86

27498.39

34213.72

Balances with Banks & money at Call

42472.45

49440.54

65291

Investments

116489.7

123195.5

122620.9

Advances

372671.5

404389.4

361301.9

Fixed Assets

5820.19

5914.49

8572.85

Other Assets

21412.91

14846.46

24628.86

Others

0

0

0

TOTAL ASSETS

578154.6

625284.8

616629.2

 

Contingent Liability

 

252826.4

 

174892

 

354063.4

Bills for collection

21862.72

26420.18

26902.1

 

Cash Flow Summary

2014

2015

2016

Cash and Cash Equivalents at Beginning of the year

76938.92

61760.31

55377.13

Net Cash from Operating Activities

18310.79

14638.2

6451.62

Net Cash Used in Investing Activities

-608.69

-754.66

-813.88

Net Cash Used in Financing Activities

4863.7

1295.07

745.44

Net Inc/(Dec) in Cash and Cash Equivalent

22565.8

15178.61

6383.18

Cash and Cash Equivalents at End of the year

99504.72

76938.92

61760.31

 

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DISCLAIMER

This report is only for the information of our customers. Recommendations, opinions, or suggestions are given with the understanding that readers acting on this information assume all risks involved. The information provided herein is not to be construed as an offer to buy or sell securities of any kind. ATS and/or its group companies do not as assume any responsibility or liability resulting from the use of such information.

 

 

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